RAOC, Hilton

Part of Petitions – in the House of Commons at 11:18 pm on 18 March 1986.

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Photo of Mr John Lee Mr John Lee , Pendle 11:18, 18 March 1986

I congratulate my hon. Friend the Member for Derbyshire, South (Mrs. Currie) on her good fortune in securing this Adjournment debate. I welcome the opportunity to give as full a statement as I can about the Royal Army Ordnance Corps vehicle sub-depot at Hilton. Before dealing with the more specific issues raised by my hon. Friend I think it would help if I were first to explain the background against which decisions concerning support to the Army are made.

It is a major objective of this Administration to instil into all areas of the public sector a much greater awareness of costs and cost-effectiveness. We have done much, for example, to encourage the participation of the private sector in support of those administrative activities which it is not strictly necessary to have done by MOD employees. The taxpayer is already benefiting from greater competition, either as resources are released for more effective use elsewhere or where cost-cutting reduces the burden the public sector imposes on the economy. This is evident, for example, in the way in we have been able to reduce the size of the Civil Service, so that expenditure on salaries, and so on, is correspondingly lower than it would otherwise have been.

The financial management initiative is a catalyst for much work in the Ministry of Defence, in part aimed at improving the knowledge that managers at all levels have of their costs. Indeed, some of the studies to which I shall refer later result from the more creative thinking which the FMI has encouraged.

As I have said before, it is a paramount point of principle that we have a duty to the taxpayer to see that defence funds are spent only on essential activity, and spent in the most cost-effective manner. In the defence support area it is the policy of the Government to retain activities in the public sector only where this is operationally essential or where there is a clear advantage to the taxpayer. In this way, we aim to extend the scope of activity which benefits from the effects of competition.

Support for the army, and logistic support in the case of the vehicle sub-depot at Hilton, must be considered against the background I have just outlined. More important, resources released from the support area can be redeployed to front-line and other operational areas—from the "tail" to the "teeth", as we put it.

I turn now to the Hilton situation in particular. The vehicle sub-depot at Hilton—as my hon. Friend well knows—is about 15 miles from Derby and occupies a site of about 250 acres. It employs some 236 civilian staff and holds about 6,500 vehicles.

It is one of three vehicle depots which between them receive, inspect, maintain, store and issue all Army vehicles—from tanks to trailers, from cars to cranes. They also handle vehicles for the Royal Navy and the Royal Air Force.

The other two depots are Ludgershall in Wiltshire, which deals with armoured vehicles—"A" vehicles—and Ashchurch in Gloucestershire, which, together with Hilton, processes the remainder. Hilton's main work load involves "soft-skinned" vehicles—"B" vehicles—which are identical with, or very similar, to commercially available vehicles. Hilton is wholly civilian manned; the other depots are staffed by both military and civilian personnel.

I and my fellow Ministers pay a tribute, too, to our civil servants who serve us so well in so many different capacities and especially at Hilton. I know how much, too, the Army appreciates their loyal service in carrying out their important role. I thank my hon. Friend for the opportunity to make these remarks. I know how committed she is to the welfare of the Hilton work force.

Clearly, I accept the point that there can be valuable economies from replacing service personnel with civilian staff. Indeed, it is quite proper to do so where this can sensibly release soldiers for service in front line units. In the case of the two other depots, however, the military presence is justified by the mobilisation and reinforcement roles which they are assigned in a period of tension or war.

My hon. Friend made reference to possible improvements to costs and efficiency in our current vehicle depot operations by rationalising the management structures of the depots and their associated workshops. The professional oversight of all workshop operations in the Army is the proper responsibility of the Royal Electrical and Mechanical Engineers. They are responsible for technical standards and practices, as well as for training and various aspects of interposting, for military and civilian mobile staff alike. It therefore makes no real sense, except in the case of contractorisation, for 91 Vehicle Workshop at Hilton to be disconnected from REME's wider control, and I have to say that significant economies are unlikely to accrue from an amalgamation of the storehouse and workshop elements. The same applies in even greater measure to the REME workshops at Ashchurch and Ludgershall, which reflect the discrete specialisms of the supply and the engineering staffs.

Our experience of involving the private sector and introducing competition into Government activity has shown significant savings. Hilton's work load embraces vehicles that are in everyday use up and down the country. It was quite appropriate, therefore, to consider whether there would be advantage in putting the work out to contract. We mounted a feasibility study late in 1984 and received a report which recommended that the idea be pursued. In the normal course of events, we would have then consulted the work force and its representatives about our resulting proposals. This would have taken place last autumn.

However, the armed forces, and the Army in particular, are dependent on vehicles for all types of operational and support activities, and our vehicle holdings are considerable. It is not surprising, therefore, that recently we have been looking even more closely at ways and means of ensuring that we get maximum value from expenditure in this area and that our vehicle holdings are no more than the minimun needed for our purposes. There are a number of studies in train which could impact upon vehicle requirements, and thus on the numbers we need to keep in store. We are examining, for example, greater use of the private sector for the provision of the Army's day-to-day administrative transport. Vehicle leasing is a possibility, and there are other examinations of both our holdings and our purchasing arrangements under way.

What this means is that we are currently unable to forecast with sufficient accuracy Hilton's workload over the next four to five years, and so we are in no position—on that count alone—to frame a viable tendering exercise to which industry could reasonably be expected to respond. The result is that the Hilton work force, knowing full well that a study into contracting-out has taken place, and, indeed, having been given a summary of its findings, has so far heard nothing further about progress. I naturally regret that, but we have not been in a position to say anything useful while the other studies continue.

The climate of sustained uncertainty endured by the work force is most unfortunate, and I should have preferred to eliminate it entirely. However, as I have mentioned, we are still engaged in studies which might materially affect the numbers of vehicles that we need to process through or store in the depots. Certainly, in this situation, we cannot sensibly embark on contracting out, and I am tonight taking the opportunity to announce that it is to be suspended.

But, as I said, I cannot remove the air of doubt entirely. These very studies will make it necessary for us to consider whether the overall load will drop sufficiently for our vehicle support needs to be met by just two depots. This is a very complex area, involving, not only our internal vehicle management arrangements, but our system of the procurement and delivery of new equipment. If it emerges that it may be possible for two depots to meet our needs, we shall have to be clear what impact, if any, there will be on the existing arrangements with our vehicle suppliers.

My hon. Friend raised our intention to ease the concentration in the south of defence units and establishments by encouraging relocation northwards. As I said in reply to the hon. Member for Bolton, North-East (Mr. Thurnham): This is a matter for continuing review as opportunities arise, such as when major investment is required … all proposals will need to stand on their operational and economic merits."—[Official Report, 11 March 1986; Vol. 93, c. 802.] It will be no different in our consideration of the Army vehicle depots.

It is unlikely that we shall be able to reach conclusions quickly, and though I know that my hon. Friend would no doubt prefer that her constituents were given a clear indication of the future, I fear that the necessary work will not be completed before the end of this year. Nevertheless, an announcement will be made at the earliest possible moment.